Fast-fashion empire Inditex sees profits dip

Fast-fashion empire Inditex sees profits dip
Zara is part of the Inditex fashion group, owned by Amancio Ortego — the world's third's richest man according to Forbes magazine. Photo: AFP
Spanish global clothing giant Inditex, owner of fast-fashion brand Zara, announced Wednesday a rare fall in quarterly profits even as it pushed ahead with an aggressive international expansion.

Inditex, created 40 years ago in the northwestern Galicia region by railwayman's son Amancio Ortega, said net profit fell 7.3 percent from the same period a year earlier to €406 million ($550 million) in the three months to April 30th.

It was the group's first reported profit decline since 2009.    

Sales rose a modest 4.3 percent to €3.75 billion, Inditex said in a statement.

The group said its revenue figure was affected by adverse currency exchanges, adding that in local currencies sales were up 11 percent.

Even in tough economic times, the group has pursued a worldwide expansion policy first installed by Ortega, Spain's richest man and still Inditex's biggest shareholder. Ortega retired as chairman and chief executive in 2011, handing over to Pablo Isla.

"All of Inditex's brands continue to expand internationally," said Inditex, which besides Zara owns major retail brands including Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterque.

Inditex said it opened a net 53 stores in the quarter, growing its global store network to 6,393 stores in 88 markets.

"We continue to see significant opportunities for growth for Inditex in the world," Inditex chairman Pablo Isla said during a conference call with analysts after the results were released.

Inditex said it will begin sales of its Zara brand via the Internet in Mexico and South Korea.

The company will expand its online offer in China with the launch of an online store in the Tmall e-commerce platform.

Inditex now offers online sales in 25 countries — 21 European nations plus Canada, China, Japan and the United States.

The group said it would hold an annual general meeting on July 15 where it will propose paying shareholders a 2013 dividend of €2.42 for each share, of which half was paid last month and the balance would be paid November 3rd.

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